Affordable Housing Construction in Limbo

As construction workers swiftly make real the towering edifices of Vida Condos at Mission and 22nd—and the units in the luxury development steadily sell for $1000 a square foot—a plot of land granted to the city by Vida’s developer for affordable housing sits at Shotwell and Cesar Chavez with nary a crane in sight.

While Vida’s 114 units are on-schedule to be completed by 2015, the project to build 44 below-market units on Shotwell is stuck in limbo.

It’s not alone.

The Shotwell land is among four properties in the Mission slated for affordable housing that have yet to begin any development process. Included in those city-endorsed, but yet-to-move projects are properties on 24th and Harrison, 17th and Folsom and Mission at 16th. Together with Shotwell, the projects would bring nearly 200 units of inclusionary housing—generally, housing for households earning up to 80% of area median income—to the Mission.

But when exactly those projects will materialize, much less get underway, is anybody’s guess.

There’s money in the city’s housing coffers, but no one has yet released it.

“It’s a game of priorities,” says Fernando Martí, co-director of the Council of Community Housing Organizations (CCHO) a non-profit coalition that advocates for affordable housing. “There’s quite a bit of money coming in, but they have not been willing to release it.”

The city’s roughly $20 million plus Housing Trust Fund could be used to subsidize much of the proposed projects, and could be augmented by matching federal grants.

On average, the city subsidizes the construction of affordable housing at about $250,000 per unit. Without any matching federal grants, the Housing Trust Fund can jumpstart the construction of at least 80 of the 200 units. However, the city has yet to decide how the Housing Trust Fund money will be used. Moreover, the city may need much of it to repair its 6,054 units of public housing, according to housing advocates.

In addition, there is the Citywide Affordable Housing Fund, which contains money from fees developers pay to opt-out of building affordable housing on-site. With a growing number of large developments opting to pay the fee (roughly one in two of developers behind projects completed in 2013 did just that) the fund has swelled. While officials couldn’t confirm its current balance, it gained more than $9 million in 2013, and developers have paid $87 million into the fund since 2004.

When asked about the future of the Mission projects and when exactly they will get underway, deputy director of the Mayor’s Office of Housing Teresa Yanga confirmed that none of the projects’ timelines are known at this point.

“It all depends on our budget and resources,” Yanga said.

In regards to Vida’s land dedication on Shotwell, Martí said the city has sent out no calls for project proposals to developers—one of the first steps in the process. The same is true for other projects in the Mission, as well as about a dozen properties throughout the city, some of which have been in a state of limbo for years.

“The mayor had said he would move to make 30,000 homes, and 10,000 of those need to be affordable in the next six years,” said Martí, referring to Mayor Ed Lee’s seven-point housing plan from his January State of the City speech. “They need to get jump-started in the next year if they’re going to meet the mayor’s goal of building all this affordable housing.”

The Current Inventory

According to the Planning Department’s Housing Inventory report released in April, 1,960 units of new housing were added to the city’s housing stock in 2013—this net increase is up 49 percent from 2012. According to the report, 712 of those newly completed units were affordable, but the majority are primarily for very low-income households or those households making up to 50 percentage area median income.

Of all the affordable housing completed in 2013, only 220 are a result of the inclusionary housing law that generally aims to create housing for households earning 80 percent of the area median income (More specifically, the city’s Inclusionary Housing Program creates rental units for households earning up to 60 percent area median income and ownership units for households earning up to 100 percent area median income.)

All of those completed 220 units were constructed on-site at market-rate projects as a result of the city’s inclusionary housing law. More would have gone up with the market-rate housing, but nine of the 16 developers with projects completed in 2013 opted to pay in-lieu fees.

If these developers had built on-site inclusionary housing, the city would now have about 40 more units of affordable housing.

It’s a similar story with housing projects in the construction pipeline (those approved for construction by the Department of Building Inspection). Currently, there are 36 projects approved for construction, representing a total 6,168 future units. Of those, 544 are slated to be below-market, on-site units.

About a third of the projects have opted to pay the fee instead. If these projects had chosen to build on-site units, it would mean about 180 more affordable housing units in the works.

While many housing activists complain that the in-lieu fees are a quick way for developers to side-step their obligations to inclusionary housing law, Tim Colen, executive director of the pro-development think tank the San Francisco Housing Action Coalition, argues that these fees not only cost the developers a great deal, they contribute significantly to the funds the city has for affordable units.

“The Mayor’s Office of housing can build more with the fee,” said Colen, adding that the fees can be used to get matching grants from the federal government. “They need more damn money… we think it’s strange that interests that are saying we need to build more low income housing but would deny the city this money.”

But for housing activist, it’s not so much the amount of money, it’s the question of where that money goes once it’s in the city’s coffers – and, they question whether it is going anywhere at all.

“Fees are great, they provide a source of money, but they are a somewhat volatile source,” said Martí. “They go up when there’s a lot of development, but they grind to a halt when housing slows down.”

Issues with Budget and Resources

Creating affordable units—specifically below-market units primarily for households earning up to 80 percent of area median income—is just one piece of a perpetually complex housing puzzle.

By all accounts, one piece of that puzzle is in severe crisis: the city’s public housing stock and that crisis has at least put off using the city’s housing funds for new housing.

In recent years, investigations, lawsuits, and numerous complaints from residents have plagued San Francisco’s Housing Authority, the agency that manages the city’s 6,054 units of low-income, public housing. The agency has shut down hundreds of its units that are in need of serious repair and its waiting list has been closed since 2010.

“The Housing Authority has imploded and needs more money,” said Tim Colen.

In 2012, the Housing Authority faced a series of lawsuits from employees alleging the agency’s director Henry Alvarez of discrimination.

The turmoil at the Housing Authority occurred around the same time Governor Jerry Brown had passed a measure to dissolve the state’s 400 Redevelopment Agencies, including San Francisco’s, which developed housing in low-income communities.

The end of the San Francisco Redevelopment Agency created part of the incentive for creating the Housing Trust Fund, which voters approved with the 2012 passage of Proposition C.

The Housing Trust Fund set aside $1.5 billion from the general fund and leftover funding from the Redevelopment Agency for the production and preservation of affordable housing over the next 30 years.

Many advocates of the fund thought it would spur construction of affordable housing, but with the crisis in public housing, city officials began to look toward the Housing Trust Fund. It now appears that much of it will be funneled into fixing the city’s exisiting public housing units.

“There’s specific things the Housing Trust Fund must go to, such as down payments for moderate income home buyers, a housing stabilization program,” said Teresa Yanga of the Mayor’s Office of Housing.

She acknowledged, however, that the fund’s potential uses could be broader than affordable housing.

“It’s intended to go towards housing infrastructure, which potentially means below market rate units or public housing could use that fund,” said Yanga.

Martí believes that Yanga and others are trying to add up the costs of what they need to make the repairs on the city’s public housing stock. “They’re now in the process of figuring out how much money it’s going to take…whether or not certain properties will require major rehabs or something smaller,” said Martí. “That’s why (the) Mayor’s Office of Housing is holding onto its funding, but that’s why we think more budget needs to go towards affordable housing.”

Yanga acknowledged that the end of the Redevelopment Agency was a blow to Mayor’s budget for housing.

“For its first year, the Housing Trust Fund has $20 million and it’s expected to grow to $50 million, but compared to what the Redevelopment Agency’s annual budget was, roughly $40 to 50 million on average, that’s a big difference” said Yanga. “20 million vs. 40 to 50, you can do math.”

Yanga also said that much of the funding for affordable housing can be market driven and therefore unpredictable. While the last few years has seen lots of construction and developers paying fees into the city’s Affordable Housing Fund, that may not be as consistent in future years.

Yanga stressed that “the public housing conversation has just kicked off” and that questions of how the city will spend its Housing Trust Fund should get sorted out in the next 18 months.

Mission Prospects, Uncertain Timelines

For the Mission, the dilemma of fixing the city’s stock of public housing, means that at least three projects that would create nearly 200 below market units may be waiting in the wings for an uncertain amount of time.

“This is what I know, they are first developing the New Mission Theater property, two or three years later they’re going to develop this land,” said Howard Ruy, owner of Autosmog & Oil Changers, the business that currently occupies the plot on Shotwell slated for affordable housing. “But they also said it could take five years… I have no idea, they haven’t given me any information at all.”

To comply with inclusionary housing law, Vida’s developer Dean Givas opted to buy the parcel of land on Shotwell and grant it to the city to be developed into affordable housing, 40 units in all. When the deal was finalized last year, the future of the Shotwell plot moved out of Givas’ hands and into the city’s.

“I haven’t had any contact since the transfer of that property, I don’t even know if they’ve selected a developer,” said Givas, who guessed that given the project’s community support it will likely be granted various exemptions, thus expediting the development process. “They should get through the process in two to three years, I don’t know why it would take more time.”

Since 2011, there’s been plans to turn part of the parking lot on the corner of 17th and Folsom into a public park and another section of it into affordable housing. While the Parks and Recreation department has finalized plans for the park and announced a tentative Summer 2015 opening. Plans for the development of affordable housing remain murky.

More recently, in December of 2013, San Francisco Unified School District (SFUSD) voted to sell the city a former school building at 1950 Mission Street, near the corner of 16th Street. If constructed this project would bring 115 units of below market housing to the Mission. This project also needs to be approved by the Board of Supervisors, but according to SFUSD spokesperson Gentle Blythe, the property’s future lies with the Mayor’s Office of Housing.

“The SF Board of Education approved the transaction with the Mayor’s Office of Housing (MOH),” wrote Blythe in an email message to Mission Local. “In approving the transaction, the Board of Education fully expects the MOH to develop the property for affordable housing.”

If constructed, according to Fernando Martí, the Mayor’s office has said the 1950 Mission project is on the short list to begin the development process, the first step of which sends requests for proposals to various non-profit developers. After that, it could take around three years for the project’s completion. Being shortlisted could mean this project gets started this year, or the wait could be much longer.

The future of the fourth potential affordable housing project, which would be constructed by Mission Neighborhood Centers at their existing property on 24th and Harrison, has been stalled, in part, due to issues with a loan the non-profit received from Head Start in the 1990s. To begin construction on the new project, the Mission Neighbor Centers needs to transfer the federal interest on the property and find a new location to host its Head Start programs.

The project called Casa de la Misión, which will have 32 units and ground-floor community space, already has an architect and initial plans. According to Maria Bermudez, director of operations at the non-profit, the project has already been pre-approved for a development loan from the Mayor’s office.

“In order for the Mayor’s Office of Housing to give us investment with that property, they need a clean title,” said Bermudez of the issue sorting out the federal loan on the property. “We just have to go through a lot of paper work… but we’re anxious to get moving.”

Same is true for the thousands hoping to find affordable housing—they’d like to get moving too.

For even more details, you can go straight to the sources, and peruse the documents we used for this story below:

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12 Comments

One possible outcome is that they delays in sorting out how the funds will be used will mean that serious construction work of affordable housing will start during the next economic downturn, which would be great — because construction labor costs will be lower and the city could stretch its $$ further. If the city built all the affordable housing now, it would be paying top $$ for construction. That, and the counter-cyclic influence of building the housing during the downturn would help maintain employment and activity when it is needed most. If the mayor is very strategic, he might even be trying to plan for that sort of timing…..

Sounds like typical local government inefficiency to me. They just can’t get their **** together and actually start the process of building.

IMO, two things need to happen:
1) A reshuffling of the government agency that managers the Citywide Affordable Housing Fund. These guys seem incompetent and need a kick in the pants.
2) Make it harder for developers to pay a fee instead of building affordable housing on-site. Building on-site guarantees the units will be built ASAP and it creates better neighborhood diversity, since people of different income levels can live in the same building. Pushing those people out to less desirable lots creates mini-ghettos, if/when the affordable units are built.

The CCHO hitched their wagon to the developers to pass the Affordable Housing Trust Fund. But this was not the fund that Daly had put forth in 2008 that was a no-strings-attached cut of the General Fund. No, it traded off cutting required onsite inclusionary by 25% for a guaranteed cash flow to make up for the ending of the redevelopment agency’s source of funding for housing. Having folded before developers to keep their crack flowing, the CCHO now finds itself out in the cold again, with Lee taking those dollars and sending them anywhere but to the CCHO. Hell, the CCHO crowd has not won a contested election since Prop M in the late 1980s. They only win when they hitch their wagon to the neoliberal parade and that means that we lose when they win.

This serves the nonprofits right, and we need to meet this pincer move from “the left” to ensure that these nonprofits can no longer be allowed to be in a position where they are political gatekeepers to the community who run toll booths that developers have to pay into to keep them running their toll booths but little else.

There were two affordable housing trust fund ballot measures, clueless one. Daly’s failed because saboteur Enrique Pearce was hired by Calvin Welch to run the campaign that did not alter the affordability criteria. The second one passed because it gave away the store to developers by lowering on-site percentages in the hopes of seeing more projects building fewer percentage units on-site. A progressive approach would have been to double the off-site percentages to achieve the same goal with the original on-site percentages maintained or increased. We gave you a chance to conquer your idiocy but clearly your idiocy has won.

“How is Proposition C funded?
With the recent dissolution of the redevelopment funding statewide, San Francisco lost its primary local source for affordable housing. These reductions come at the same time that federal funding for affordable housing has also experienced dramatic reductions.”

The affordable housing mafiosi are incapable of winning a contested election, therefore they have to fold like chairs before the neoliberals to keep their crack flowing to get that next fix. The reason why the cut to the inclusionary percentage was included was so that developers would not oppose the measure. That concession combined with keeping Enrique Pearece as far away from the campaign as possible led to victory, albeit at tremendous costs.